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Thread: What kind of insurance should I carry to design and manufacture motorcycle parts?

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    bellinoracing is offline Hot Rolled
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    Default What kind of insurance should I carry to design and manufacture motorcycle parts?

    In the past I made and sold a few little oddball motorcycle parts and I am looking at getting a business going that will make all sorts of car and motorcycle parts. What kind of insurance should I get to protect my self against being sued for a failed part that caused injury or damage?

    I am going to go to the extreme to design and test my parts to ensure the highest quality possible but at some point I will probably get blamed for a bad part whether it is truly bad or not. Any other precautions I should take? I will probably put some sort of disclaimer, not responsible...... in all parts that I sell but I still think some kind of insurance would be a good idea. Where do I buy it and what is it called?

    thanks

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    LKeithR is offline Hot Rolled
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    The only "safe" way to get an answer to this question is to ask a lawyer...
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    Mud's Avatar
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    You need Products Liability insurance for that. Problem is, most carriers have a minimum premium of about $50K to write it. The alternative is to go 'bare' and have so few assets in the corporation that you don't look attractive to a personal injury attorney.
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    You don't need insurance. The only way you are going to get sued is if you have insurance. If you have no insurance, you aren't worth shit and no lawyer will take the case to sue you.

    They may subpoena your material certs and go after Alcoa, or you may have used a Hanita endmill and they will go after them, but if you have no insurance, there is nothing there for a lawyer to go after, you're pretty much free and clear.

    Personally I wouldn't touch a damn thing that has to do with a wheel or brakes or suspension of a road legal vehicle.

    If you do, cash deal, no receipts. If you want to actually sell them, get a PE to sign off on it.

    If I did ever get into things that could hurt people, and I might, there will be a placard saying

    "If you are stupid, this will kill you, if you can't figure out how it will kill you, never use it... because you are probably stupid, we have no money and no insurance to pay you if you are stupid enough to get hurt and sue us. If you're dead, you're family aint gettin' no money neither, because if they gave two(2) shits(stinky poops) about you, they should have read this label and known you were too stupid to use this equipment and stopped you".

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    pistonskirt is offline Hot Rolled
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    Quote Originally Posted by Mud View Post
    The alternative is to go 'bare' and have so few assets in the corporation that you don't look attractive to a personal injury attorney.
    Insurance quotes to cover for a one man band doing race bike / car work over here have been as much as 65,000 per year .....which is about as much as one man could possibly earn from the work.

    Most people that I know operate on the same principle as quoted above....as my father often said "if you have got nowt, they can get nowt"

    Sad situation but that seems to be how it is unless you want to move to Thailand or similar country where lawyers dont dictate economic activity to this absurd extent

    regards

    Brian.

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    SRT Mike is offline Hot Rolled
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    Some good and really bad advice in this forum.

    Not having insurance isn't a good idea. If you have something of value to protect, you should get insurance. If you own a home or even your car, it's worth having insurance. Putting things under a corporation is no guarantee of immunity.

    Product liability insurance is what is needed. Most insurance companies don't want to write a policy for a small company, but that doesn't mean none will.

    I looked around a while ago and I found several priced at around $5k a year for a $2 million policy. Talk to your insurance broker. If they don't cover business insurance, call around some other brokers. A good broker will be able to source product liability for you and it shouldn't break the bank.
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    Best insurance is... never use china materials. #2, don't skimp and be cheap. #3, incorperate so yours is yours and business is business.

    As said, stay away from brakes... braking functional parts anyway. Will you be messing with strength critical parts? Something that failure could result in injury or death? Quality materials is your only choice. I have sent replacements for other peoples failed parts... really bad the way some will sacrifice quality for maybe save a buck.

    Will be good to include a disclaimer.

    In purchasing this or any of our products, you understand that there are risks involved in performing any modification to any vehicle. It is the responsibility of the buyer to ensure parts are installed properly by qualified personnel. Parts are intended for a specific use and we can not be held responsible for damage or injury resulting from misuse or impropper installation.

    Well something like that anyway. Saw something about like that somewhere. Face it, we all know someone can't fight their way out of a wet paper bag, but also someone that could break an anvil with a plastic hammer. Just ain't no guarantee what people will do, or do wrong. Do your math and put quality on top.

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    BadBeta is offline Stainless
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    Motorcycle parts is not my thing, but when I do something the best insurance is to make sure the product is up to any and all official standards, regulations and norms. And document that and the process to make sure it is.

    Here in Europe the CE mark is roughly a mark that says that the manufacturer have followed all relevant standards and regulations, and that is signed by a single individual at the manufacturer. That company and that person are then responsible and in big trouble if something happens and those standards they signed off on were indeed not followed. On the other hand, if the standards were followed, they are pretty much in the clear - and that is an important upside.

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    You don't need insurance. The only way you are going to get sued is if you have insurance. If you have no insurance, you aren't worth shit and no lawyer will take the case to sue you.

    They may subpoena your material certs and go after Alcoa, or you may have used a Hanita endmill and they will go after them, but if you have no insurance, there is nothing there for a lawyer to go after, you're pretty much free and clear.
    I've heard that quite a few times, but never from anyone who has seriously looked into it. The problem is that 1)there are plenty of hungry lawyers out there, 2) it costs very little to add names (like yours)to a lawsuit once it's initiated, and 3) it can bankrupt you to prove that you are innocent. Add up everything you own, add to it all that you can earn the rest of your life, divide by 40% and ask yourself if a lawyer would like to put that in his pocket. If the answer is yes, you need protection. I know someone who will never be out of debt so long as he lives because of this, plus he spent a few years in jail for negligence. There are lots of really desirable products that will never be marketed because they can't affordably be insured, and the inventor won't risk making it without the insurance.

    Talk to a business attorney about incorporating(and LLCs, etc.) and see if that's enough protection for you.

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    SND
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    For car and bike parts, certainly look at going through the hoops and how that will affect your pricing and then decide if its even worth trying to make anything for that market.
    Might be more money in making billet key chains and other decorative crap than anything functional.
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    Quote Originally Posted by Mud View Post
    I've heard that quite a few times, but never from anyone who has seriously looked into it.
    There was a guy on here a few years ago. He had worked on some type of press back in like '84. Several people had worked on it and modified it since, the guards had been removed, but he was sued, why? He was the only one who had insurance that had worked on it.

    Its self perpetuating. If there was no 'liability' insurance, there would be less lawyers. If insurance companies didn't get sued, they wouldn't have a product to sell. You pay the insurance companies, and you pay lawyers, why? So the lawyers can sue the insurance companies. Another whole bunch of assholes in suits that do nothing but suck value out of your hard work.


    BTW, incorporated with 2 million in liability, I just think its a wasted expense, unfortunately sort of necessary.

    Just another bit of welfare for the assholes in suits that don't produce anything of value or create any actual real wealth. And the person that actually got hurt because they were stupid gets a $10 gift card to Sears.

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    I make a small table top hydraulic press, I looked into product liability insurance, I needed to provide outside testing of my product from a certified testing company. The more I sold the higher the rate, the longer the tool lasts the higher the rate and you need to keep it going forever. The quotes that I recieved were 50,000 dollars a year on total sales of 100 per year I got quotes in the high six figures as well. There is no way I could pay that much it is more than the total profit of my entire business. I went to an attorney and he asked me how big my trust fund was and how many millions my house was worth, I told him I had a negative net value and he laughed and said you are bullet proof, no lawyer will take a suite were there is no hope of winning any money. Even if he were to win it would be paid out at 100 bucks a month forever. He said dont worry about it. If you start to make milllions then call me and we can work it out.

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    metlmunchr is offline Diamond
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    Most any product liability policy that appears to be cheap is going to be a claims made policy rather than an occurrence policy. The difference in price of the two types of policies is simply reflective of the huge difference in coverage between the two.

    Say you're making and selling a product in 2012, and have product liability. By 2015 you're no longer manufacturing the product, and are either retired or strictly making parts to the designs of others, and believe you no longer need product liability coverage.

    Someone sues you in 2015 for an injury your product supposedly caused in 2012. If your policy was the occurrence type, you're covered the same as if the suit was filed in 2012. If its the claims made type, then you're only covered if you're still carrying an active product liability policy with the same company you insured with in 2012.

    The simplest way to put it is that the insurer's liability with a claims made policy is no longer in force the instant you no longer have an active policy in force with them. This is true regardless of whether you fail to renew the policy, or the company refuses to renew the policy. If you had a policy with ABC Co. in 2012, and switched to coverage by XYZ Co. in 2013, you'd still have no coverage for an incident that happened in 2012, even though you may still be insured by XYZ in 2015 when the action is filed.

    When you look at the typical time lapse between an incident happening and the filing of a lawsuit, and the ability of an insurer to shut the door on liability the day active coverage ends, its not surprising that a claims made policy is a lot cheaper than an occurrence policy.

    Machining in general is not a high risk business, so a person wouldn't want to assume that they could maintain the cheaper claims made coverage with one company over the long terms based on their experience with maintaining general liability with one company over several years. Product liability is considered high risk, so its a different game.

    Insurers move into and out of high risk coverage with every change in the wind. During the last 15 or so years (1990 to 2005) we were in the crane business (definitely high risk), we seldom had insurance with the same company 2 years in a row even though we'd never had an injury claim, and had not had any property damage claims other than one for about $15K back in the mid-70's. Always had the same agent, but the actual insurers were continuously moving in and out of the business. It wasn't a big deal for us since we always had occurrence coverage, but the same situation with claims made coverage would've left us continuously exposed to anything anyone claimed to have happened previous to the effective date of the current year's policy. As Mud said, you can end up broke from defending against such a claim even if you win in court.

    Unlike things like workman's comp and other such coverages where the premium goes down over time if you have a good safety record, the premiums for any sort of high risk coverage vary with the losses of the insured pool. When the moron in Milwaukee used Big Blue to lift a 180,000# truss in a 40mph wind, and did about $150 million damage for his efforts, our crane coverage went up almost 20% the following year.
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    Quote Originally Posted by Bobw View Post
    There was a guy on here a few years ago.
    Do you have anything more substantive than "a guy on here a few years ago."?

    Everyone who discusses this brings up this argument. Even the Insurance salesmen and attorneys. Kpotter is a good example of where it can work, he's judgement proof, or seems to be. You claim to have 2 million coverage if I understand your post. Why then do you have coverage if you are better off without it? Having insurance makes you more attractive in a legal action, but it's not necessary to have it to get sued out of existence. Going bare makes your pocket less deep and you less attractive, but is not a guarantee of not getting involved. Getting successfully sued can drive your premium up so high you can't afford to renew, or can inspire your carrier to find a reason to not renew altogether, so that's another argument to not bother with coverage, because you;ll lose it if you use it.

    You make your choice and you take your chances.

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    Bobw's Avatar
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    Quote Originally Posted by Mud View Post
    Do you have anything more substantive than "a guy on here a few years ago."?
    Nope.

    You claim to have 2 million coverage if I understand your post. Why then do you have coverage if you are better off without it?
    Part of our lease agreement, something about the owner of the building not wanting to lose it.

    I don't think we would necessarily be better off with out it, but I do think the whole mess needs to change.

    I think our chances of getting sued go up exponentially with insurance. Can't get blood from a stone.

    If you hit your thumb with a hammer, you're an idiot, if you fall off a ladder, your an idiot, if you suffocate because you put a plastic bag over your head, your an idiot. You shouldn't get to play the "I'm an idiot *lottery*"

    Insurance should really only be for the worst case scenario.

    Basically I'm just bitter about assholes in suits telling me what I need to do, and it always seems to take money out of my pocket and puts in theirs.

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    Seems to me that if you are making aftermarket parts that the user installs himself, a good, lawyer written disclaimer with lots of weasel words will go a long way toward absolving yourself of malpractice in how it was installed and used.

    At the same time, your "exhaustive testing" will help you determine the right range of materials and configurations for the parts. Being over built and over engineered should go a long way toward not having one break at a bad time.

    re: Insurance and such, damned if you do, damned if you don't. Always a tradeoff, but a lawyer consult is one way to go. My product development friend Ty can help you at triginnovation.com also

    Good luck

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    behindpropellers is offline Stainless
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    Place this label on all parts to remove any lawyers from looking into it:

    "Made in China"

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    I'm saying. A disclaimer. Especially in this case that it would be parts installed. Stress the point that it is buyers responsibility to ensure proper installation and you can not make any guarantee on their behalf or be held responsible for their screw up.

    Just make the parts right and don't get sloppy. For your own piece of mind, if it is strength critical and needs to support 1000 lbs., make it capable of supporting 10,000 lbs. The problem with things being junk these days is the large company greed. They keep squeezing nickels and dimes out of things until something fails

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    Mud's Avatar
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    Quote Originally Posted by Bobw View Post
    Nope.



    Part of our lease agreement, something about the owner of the building not wanting to lose it.
    That sounds like liability for your premises, and that's a whole 'nuther world from products liability, costs about .01% of it or less, and is fairly routine.
    What I'm saying is don't give advice to the guy asking for advice unless you have looked into it.

    Quote Originally Posted by Bobw View Post
    Basically I'm just bitter about assholes in suits telling me what I need to do, and it always seems to take money out of my pocket and puts in theirs.
    No argument there! Shakespeare was right.

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    I didn't mean to submit that last post yet.

    Anyhow, that is the problem with much of business. big business anyway. It is only about maximum profit. Yeah, we do things to make money, but when you sacrifice safety to make more money is right out stupid and should be punished by public hanging. Drug companies.... they don't give a F#$K about side effects or death. Hell, they are making up new conditions to sell drugs for. "Shift work disorder".... that is the most messed up shit I've heard. they make drugs to cover symptoms and and cause new symptoms that you can take another drug for. I certainly believe the doctors and damn sure the FDA are paid off well. It ain't about making you well, it's about money and only about money.

    My point is, do it because you can do it, like to do it, and can do it right. If you do something and turns out big, and when it becomes about making more money and big money, people seem to lose touch with their humanity and don't give a damn about others, just more money.

    Use disclaimers and do it right and use quality materials, that's your insurance. I've made suspension links for some motorcycles. And for my own which had been over 200 MPH many times. But I have seen and heard of other's failures. Doesn't bother me as much when I do the math. I've seen some broken links that appeared to be cast aluminum. That's flat out careless. When a link from factory uses needle roller bearings, I use needle roller bearings and heavier material all the way around, with support from a calculator and physics. But I have seen many with skimpy material and bronze bushings. Just trying to go cheap they are. What do you guys think about using bronze bushings where there is constant lateral for in the thousands of pounds??? Yeah, i've seen them go bad fast.

    Anyway, in my long winded rant, what I'm trying to get at, is don't be the bone head that tries to skimp a few dollars at the expense of safety and you should be alright.

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